4 Effect of recovering a receivable previously written off The accounts receivab

Question

4 Effect of recovering a receivable previously written off

The accounts receivable balance for Don’s Shoe Repair at December 31, 2014, was $87,000. Also on that date, the balance in Allowance for Doubtful Accounts was $3,000. During 2015, $2,300 of accounts receivable were written off as uncollectible. In addition, Don’s Shoe Repair unexpectedly collected $130 of receivables that had been written off in a previous accounting period. Sales on account during 2015 were $218,000, and cash collections from receivables were $220,000. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period. Also on that date, the balance in Allowance for Doubtful Accounts was $3,000 and the balance in Retained Earnings was $84,000.

Organize the information in accounts under an accounting equation. (Show effect on the accounting equation in the order provided in the question. Enter any decreases to account balances with a minus sign. Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings".)

Cash + Accounts Receivable - Allowance = Liabilities + Equity/Retained Earnings Accounts Titles for

Retained Earnings

1

2a

2b

3

4

5

ALLOWANCE FOR DOUBTFUL ACCOUNTS ( )

ACCOUNTS RECEIVABLE ( )

NET REALIZED VALUE ( )

c What amount of uncollectible accounts expense will Don’s Shoe Repair report for 2015?

UNCOLLECTIBLE ACCOUNTS EXPENSE ( )

Required

Explanation / Answer

c

AR a/c To bal b/d 87000 By All 2300 To All 130 By cash 130 To sales 218000 By cash 220000 By All 2180 By bal c/d 80520 305130 305130

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